After defeat in West, U.S. carbon tax push looks East

SEATTLE (Thomson Reuters Foundation) - Washington state voters have turned down what would have been the first U.S. carbon tax - but “carbon pricing” efforts are expected to push on in 2019, with nearly a dozen largely eastern states considering legislative proposals, experts say.

The rejection of the Washington ballot initiative in mid-term elections this week “shifts the limelight to legislative approaches,” he said.

Also, “California, Washington, Oregon and British Columbia have dominated” the issue, Green said. “It’s going to be the East Coast’s turn to make it happen and lead on climate.”

Putting a pricetag on greenhouse gas emissions is considered crucial to stemming global climate change as it factors damage from climate change into economic decision making, including by businesses, economic experts say.

In Washington, the Carbon Emissions Fee and Revenue Allocation Initiative would have imposed a $15 fee on each metric ton of carbon emissions, rising $2 a year until the state’s 2035 emissions target is met.

While backers had not yet conceded defeat as of late Wednesday, the “no” votes were leading with more than 56 percent.

The initiative’s defeat came after Washington voters turned down a similar proposal in 2016 and the state legislature failed to pass a carbon tax in the 2018 legislative session despite having a Democratic majority and a governor who strongly favors climate action.

Voters in Portland, Ore., did approve a business tax to fund renewable energy on Tuesday. But some carbon pricing advocates think state legislatures now represent a better path forward.

Green said he believes carbon pricing will have more success if leaders take a multi-state approach.

For example, proposed legislation in Rhode Island and Connecticut contains “trigger” clauses that would enact carbon pricing only if their larger neighbors in Massachusetts and New York, respectively, adopt such policies.

This strategy builds on the existing regional cap-and-trade system for electricity in the Northeastern and Mid-Atlantic states.

Massachusetts Republican Governor Charlie Baker, who was re-elected Tuesday, expressed support for a regional carbon tax during a gubernatorial debate on November 1.

“Despite the setback of the Washington ballot initiative failing, the progress made from this fight cannot be overlooked,” said Jeff Mauk, executive director of the National Caucus of Environmental Legislators.

“Washington was the first state to progress a carbon price to the Senate floor,” he said, and a “strong and diverse coalition” of backers formed around the latest ballot initiative.

Mauk pointed to the likelihood of a “cap-and-invest” bill being introduced in Oregon’s next legislative session, and the potential for action in New Mexico, a state that has previously studied carbon pricing.

Progressive legislators are also pledging to continue pushing for carbon pricing in Washington, though this week’s defeat suggests there may be less immediate momentum.

‘BIG OIL’ CASH

Carbon pricing advocates pointed to the continuing financial power of Big Oil, which funded the successful opposition campaign to Washington’s carbon tax with more than $30 million spent on negative ads.

The industry also successfully opposed a ballot initiative in Colorado calling for greater distances between oil and gas drilling and public spaces.

“State legislators nationally need to learn a really difficult lessons from this: The oil companies will stop at absolutely nothing and they will spend anything they need to make sure that if any carbon pricing initiative ever goes to the ballot, it is defeated,” Washington State Senator Kevin Ranker told the Thomson Reuters Foundation via telephone.

Oil lobbyists insist their opposition to taxes does not equate to across-the-board rejection of carbon pricing.

“With this election behind us, there is an opportunity for interested parties to work together on a market-based program to provide real greenhouse gas emission reductions without leaving consumers and industries that fuel our state’s economy to bear an unfair burden,” said Catherine Reheis-Boyd, president of the Western States Petroleum Association, which helped bankroll the “no” campaign in Washington.

Green believes petroleum lobbyists will have a harder time influencing lawmakers in states without significant oil industry jobs than it did influencing voters in Washington and Colorado.

According to the World Bank, 46 countries and 25 states, cities or other jurisdictions have put a price on carbon, with another 53 carbon pricing schemes scheduled for implementation.

“Carbon pricing in the United States is not dead and in fact, I think it has greater momentum,” Ranker said.